After 11 years of negotiations, the Nigerian Communications Commission (NCC) approved a 50% tariff hike in telecom services like calls, SMS, and internet bundles. While the decision is a step forward in addressing the sector’s financial strains, industry players say it’s only a partial win—falling short of the 100% hike they had long lobbied for. The 50% hike will not solve the sector’s challenges, including underfunded infrastructure and rising operational costs.
Under the new policy, operators can adjust prices within the established tariff bands of ₦6.40 to ₦50, as outlined in the NCC’s 2013 Cost Study. While Monday’s announcement did not state when the new rates would take effect, an MTN executive confirmed to TechCabal that the increase would be rolled out in a week. Subscribers who recharge before the new tariffs are implemented or have ongoing data plans will not experience immediate price hikes unless they make new purchases.
While the adjustment helps bridge the gap between operational costs and revenues, it does not fully address the broader issues plaguing the sector.
“Tariff adjustment is a step towards bridging the gap between operational costs and revenues, but it does not fully address our need for a 100% increase. However, we understand this is a move in the right direction,” said Tony Izuagbe Emoekpere, President of the Association of Telecommunications Operators of Nigeria (ATCON). “This adjustment will help operators invest in infrastructure, expand coverage, and improve service quality.”
Gbenga Adebayo, President of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), said the tariff increase is just one part of a broader agenda to ensure the sector’s sustainability.
“Increasing tariffs was only part of the solution. We are grateful for the progress made, but we are taking it one step at a time,” he said.
Industry stakeholders like Adebayo and Emoekpere believe addressing problems like multiple taxation, the protection of telecom infrastructure, and uniformity in the right of way for infrastructure are critical to improving service quality.
“The focus should not only be on tariffs,” said Adebayo. “We need a holistic approach to improve the ecosystem—starting with the protection of telecom infrastructure through proper enforcement of the Critical National Infrastructure gazette.”
The tariff hike will help major operators like MTN and Airtel manage their expenses and service debts, as operational costs have surged by 120%. The additional revenue will also be directed toward capital investments to enhance service quality. NCC Executive Vice Chairman Aminu Maida has given operators a three-month window to recover losses, after which the regulator will now focus on service quality improvements.
“We remain committed to supporting Nigeria’s digital transformation agenda and driving inclusive growth,” said Karl Toriola, MTN Nigeria CEO. “This tariff adjustment will help us maintain the critical investments required to deliver high-quality services to Nigerians.”
Nigeria’s broader economic challenges, including multiple currency devaluations, inflation, and the removal of fuel subsidies, have exacerbated the telecom industry’s financial pressures. In the last two decades, Nigeria has experienced four currency devaluations and two economic recessions, all of which have significantly impacted telecom operators’ operational costs..
At the time of Nigeria’s telecom liberalization in 2001, the naira exchanged at ₦104 to the dollar. By 2003, it had risen to ₦135, prompting the NCC to approve a tariff hike. By 2013, when the naira stabilized at ₦155, tariffs were revised downward as the sector grew faster than headline inflation r. However, the current tariff structure has become increasingly unsustainable as the naira has fluctuated between ₦1,500 and ₦1,700 over the past year. Headline inflation has accelerated above 33% since October 2024, putting additional strain on telecom operators’ ability to meet rising costs.
“What has happened over the years is compounded inflation and the devaluation of the naira, which has made production costs significantly higher than they used to be,” said a telecom CEO who asked not to be named for fear of suggesting bad faith around the negotiations.
Many operators believe the long-term solution lies in fully deregulating the telecom sector, allowing prices to be determined by market forces rather than a centralized tariff system. Under the current regulatory framework, the Nigerian Communications Act of 2003 gives the NCC the authority to set price floors and ceilings for telecom services. For instance, the price floor for a one-minute call is ₦6.40, while the ceiling is ₦50. Operators can set their prices within this range but must seek NCC approval for any adjustments—a process that is often slow and restrictive.
“The ideal solution would be to fully deregulate the telecom market and let tariffs be set by market forces,” said one senior telecom executive who asked not to be named so he could speak freely. “This would allow operators the flexibility to adjust prices in real-time to respond to economic conditions. However, such a move would require a comprehensive review of the Nigerian Communications Act.”
Some have proposed an alternative solution: implementing a fixed approval timeline for any tariff hike. For example, operators would have 90 days to submit price changes, and if the NCC does not respond within that period, the proposed price changes would be considered approved.
from TechCabal https://ift.tt/QEcMFpT
via IFTTT
I am the CEO of 9JAGISTLAND.My name is Adedeji Timothy and my co-owner is Oyekola Damilare.This blog is born out of our passion to educating to people in all aspect of internet life.We are enthusiastic about writing posts and articles online.
Write your views on this post and share it. ConversionConversion EmoticonEmoticon